Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

M/s Rakesh Construction co. Versus The ACIT, Circle-7, Jaipur

2016 (9) TMI 1404 - ITAT JAIPUR

Rejection of books of accounts - N.P. estimation - disallowance by invoking provisions of section 40(a)(ia) - rectification of mistake - Held that:- From the perusal of the assessment order, it is noted that there have been discussions between the AO and the assessee in terms of estimating the net profit rate once the books of account have been rejected. As part of that discussion, it is noted that in response to AO’s show-cause as to why 8.5% net profit rate should not be allowed, AR has submit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

noted that the decision of Hon’ble Kolkatta High Court in the case of Arjun Bhowmick (2014 (8) TMI 1075 - CALCUTTA HIGH COURT) wherein it has held that “once the n.p. rate is estimated, the AO cannot based this disallowance on the same books of accounts for the purpose of disallowance by invoking provisions of section 40(a)(ia) of the Act or general disallowance u/s 37 of the Act. The estimation made by the AO of net profit will take care of every addition related to business income or business .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

28.01.2014 in relation to the order passed by the AO u/s 154 of the Act for assessment year 2007-08. The ld. AR moved an application for adjournment at the above scheduled date of the hearing. However, given the fact that the subject appeal has been filed way back in the month of April, 2014 and couple of opportunities have been given in the past to the ld. AR, the adjournment application was rejected and it was decided to hear the matter based on the written submission filed by the ld. AR dated .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r u/s 154 may please be declared as illegal and unjustified in the facts & circumstances of the case. (2) The assessment order for above year was got completed o n agreed basis and appellant has accepted net profit @ 5.05% instead of declared net profit of 3.92% and no appeal against said assessment order was preferred to honour agreed assessment order. That net profit rate was enhanced by rejecting books of accounts u/s 145(3)/ Thus disallowance u/s 40(a)(ia) of IT Act on account of outstan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r appeal has been filed. Subsequently, proceedings u/s 154 were initiated and the AO passed an order by disallowing outstanding payment of ₹ 24,01,000 towards hire charges of machinery u/s 40(a)(ia). Against the said order, the assessee has unsuccessfully contested the matter before the ld CIT(A) and now in appeal before us. 2.1 Before we refer to the written submissions filed by the ld AR, we refer to the findings of the ld. CIT(A) as under: I have carefully considered the fin dings of th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

payment was made on account of hire charges is evidenced from the assessment record. The appellant contention is that assessment u/s 143(3) has been made and while completing the assessment a particular NP rate has been applied therefore subsequent to such assessment such amount of ₹ 24,01,000/- cannot be added by way of proceedings u/s 154 of IT Act. In this connection it may be noted the provisions of section 40(a) are of overriding nature providing that notwithstanding anything to the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

S has not been deducted then such amount of ₹ 24,01,000/- was to be disallowed. It may also be noted that the AO while completing the assessment did not disallow such amount and accordingly committed a mistake of law. Such mistake is apparent from the records and accordingly the AO has rightly initiated proceedings u/s 154 of the IT Act and disallowed such amount. As regards various case laws relied upon by the appellant nit may be stated that there are in different context mainly on the i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g entire books of accounts. Section 154 is for the rectification of mistake apparent from record. When entire books of records have been verified and conscious order has been passed, then there does not remain any room for rectification of the same. Section 154 is meant for some arithmetical and clerical error which is discern out from assessment order and not for reinitiate of any proceedings which is already consciously concluded. The extent of rectification is having very limited scope and do .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

order has been passed on agreed basis whereby NP as declared in return of income as enhanced from 2.39% to 5.05%, thus it resulted into increase of net profit of ₹ 17,72,637/- (i.e. 2.66%). Appellant has accepted the same just to avoid litigation as the same is also appearing from assessment order page No.32 dated 18.212.2009 wherein it is specifically written that the AR of the assssee firm has submitted that the firm has decided correct particulars of its income but keeping in mind issu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ide their order dated 9.10.2015 that no disallowance could be made u/s 40(a)(ia) and 40A(3) of the Act when assessment is made computing income by application of NP rate. Further the ld. AR has relied on the decision of Hon ble High Court of Kolkatta in the case of CIT vs. Arjun Bhowmick ITA No. 134 of 2014 dated 29.08.2014, decision of Calcutta Bench of ITAT in case of Future Distributors vs. Pr. CIT, Kolkatta ITA No. 277/kol/2016 dated 29.07.2016 and decision of Jaipur Bench of ITAT in case of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ofit of 2.39% declared by the assessee. From the perusal of the assessment order, it is noted that there have been discussions between the AO and the assessee in terms of estimating the net profit rate once the books of account have been rejected. As part of that discussion, it is noted that in response to AO s show-cause as to why 8.5% net profit rate should not be allowed, the ld. AR has submitted that if the net profit at the rate of 8.5% is applied, then the deduction on account of payment o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version